Nine years after the U.S. Surgeon General’s public warning to address an “obesity epidemic” attributing the “vast majority of overweight and obesity” issues to “excess calorie consumption,” Section 1437 of the Patient Protection and Affordable Care Act (PPACA) is the first national measure requiring certain chain restaurants and other eating establishments to provide caloric information on menus and menu boards. 12PPACA’s calorie and nutrition labeling requirement for standard menu items in certain restaurants, retail food establishments and vending machine operations replaced an existing patchwork of varying state and local regulations that emerged over time requiring such information be immediately available to consumers when ordering food. Consistently, regulatory bodies have articulated its legislative aim in requiring caloric information as an effort to combat obesity and, indirectly, chronic diseases.

Inflationary Obesity-Related Medical Costs

In 1996, the annual medical costs associated with obesity were estimated to be as high as $78.5 billion, with approximately half of those costs financed by the Medicare and Medicaid programs. 3By 2018 the National Health Expenditure Accounts (NHEA) estimated that the annual medical burden of obesity across all private and public payors to be as high as $344 billion per year. 4The exponential increase in direct health care costs estimated to be attributable to the medical burden of obesity is increasing at a rate consistent with the rate of increased overweight and obesity in our population. 5Although today’s society has grown more comfortable with the concept of billions of billions of dollars, to provide some reference for this estimated financial burden of obesity, consider that $147 billion is nearly three times the 2010 budget for the Department of Homeland Security. 6

First Bite at Menu-Labeling Regulation

One need only watch a single episode of Biggest Loser or take a simple magazine quiz to see that the majority of us suffer from some sort of caloric illiteracy when it comes to understanding both an appropriate daily consumption of calories and the caloric price of each food choice. Most notably, it was the Big Apple itself to first to amend the New York City Health Code to mandate that certain food service establishments must provide and prominently display calorie information on menus and menu boards for patrons. Given American’s increasing preference for eating out, the availability of nutritional information in away-from-home dining was ever more identified as an important piece of missing information necessary to reduce “calorie over-consumption and the risk of obesity and its associated health problems.” 7

Following the initial 2006 amendment to the New York City Health Code requiring such disclosure, considerable legal resources were spent to both challenge and implement the menu-labeling requirement. 8Ultimately, the 2 nd Circuit upheld the New York City law requiring menu-labeling for certain establishments, holding that such a regulation was not preempted by federal law and required disclosure that the hamburger is 1,520 calories and the vanilla milkshake another 1,600 calories is not a violation of the First Amendment. 9By the close of 2009, the majority of states had within its jurisdiction or at a county or municipality some level of required menu-labeling implemented, passed or minimally introduced for consideration and debate. 10Additionally, more studies confirmed that consumers increasingly wanted enhanced transparency regarding nutritional and caloric information from restaurants and other eating establishments to assist in food choice decision-making. 11

National Menu-Labeling Requirement

PPACA’s federal menu-labeling requirement provides a consistent and uniform standard for an industry growing considerably more concerned over facing a high number of varying city, county and state regulations. 12By removing the calorie and nutritional labeling exception for certain establishments from the federal labeling requirement, the industry may now rely on a federal standard for compliance with the labeling requirements. As of the enactment of PPACA, food establishments that are part of chains of with twenty or more locations with the same name as defined by the Food and Drug Administration (“FDA”) were required to provide the following information:

The number of calories in each standard menu item on menus and menu-boards;

Such information must be disclosed in a clear and conspicuous manner for each standard menu item on menus, menu boards, including drive-through menu-boards, as well as a suggested daily calorie intake as specified by the Department of Health and Human Services;

Food for sale in salad bars, buffet lines, cafeteria lines or other self-service facilities, including self-service beverage lines, and in displays visible to customers must be accompanied with a sign adjacent to each food offering with calories disclosed per displayed item or serving; and,

Establishments must provide certain nutritional information in written form, available on premises and upon request, as required, and each menu or menu board must contain a prominent, clear and conspicuous statement that such information is available to consumers. 13

Similarly, chain vending operations with twenty or more locations were required to immediately disclose calories of food choices for those items that a prospective purchaser is unable to examine the nutritional information prior to purchase. 14

But This Doesn’t Apply To My Clients

Recent draft guidance issued August 25, 2010 from the F DA provides needed agency interpretation clarifying its preliminary position regarding covered establishments and other essential elements triggering needed compliance with PPACA’s calorie and nutrition labeling requirements. 15Given the FDA’s expressed interpretation that “same name” is satisfied by establishments that are “owned, controlled, or operated by a single corporate entity” and “slight variations to names” will not exempt an entity from coverage under the statute, it is critical that attorneys preliminarily evaluate potential application to their clients. 16

Most importantly, the draft guidance states the agency’s position that a covered establishment may include a wide range of establishments, including the following:

The draft guidance questions and answers discuss that appropriate application of this statute to an entity is predicated on all relevant characteristics and elements being satisfied. 18However, it remains unclear whether this provision would apply to an entity that operates under the “same name” providing “substantially the same menu items” but through a variety of different delivery and establishment models within one location or less than twenty locations but in a combination of establishment delivery models at or greater than twenty. For example, will a health system that maintains centralized kitchen management that operates three hospital cafeterias, provides patient meal service for three distinct hospital locations and two skilled nursing facilities, provides catering for the doctors’ lounge at all of its hospitals and two independent ambulatory surgery centers as a vendor, makes available four rounding coffee and snack carts in employee work areas and the proud owner of all its vending machines required to comply with the calorie and nutrition labeling standards?

Conclusion

Prior to PPACA’s passage, the federal Food, Drug and Cosmetic Act excluded restaurants, cafeterias and other retail eating establishments from the federal calorie and nutritional information labeling requirements. A combination of factors including increased rates of overweight and obesity in our population, the consistent up tick of associated medical spending, and local and state regulatory bodies spearheading mandatory nutritional information disclosure requirements have brought us the federal menu-labeling requirement. Healthcare providers have long been at the front line of dealing with obesity health issues and related chronic disease management for its patients. Now, federal legislation has established a national calorie and nutrition labeling requirement to assist in creating healthier communities, improve wellness and prevent disease.

As healthcare attorneys, the significance of the federal menu-labeling requirement is not merely limited to better understanding the impact of health reform on industries that directly or indirectly contribute to the acuity of patients. Here, the FDA’s potential application and preliminary discussion of key elements of implementation of this provision trigger need for careful review and practical comment to the FDA regarding implementation of this requirement.

A collaborative report from United Health Foundation, the American Public Health Association and Partnership for Prevention, based on research by Kenneth E. Thorpe, Ph.D. of Emory University, The Future Costs of Obesity: National and State Estimates of the Impact on Direct Health Care Expenses, updated November 2009, http://www.fightchronicdisease.org/pdfs/CostofObesityReport-FINAL.pdf accessed September 28, 2010). Within the Centers for Medicare & Medicaid, the Office of the Actuary provides annuals projections of health care spending for categories within the National Health Expenditure Accounts. The National Health Expenditure Accounts track health spending by source of funds (private, Medicare, Medicaid) and by type of service or service providers.

New York City Health Code Section 81.50 (2008) required with eating establishments with 15 or more locations nationally to post calorie counts on menus and menu boards at locations within its jurisdiction.

New York State Restaurant Assoc. v. New York City Board of Health, 08-1892-cv. Second Circuit Judges Rosemary Pooler, Sonia Sotomayor and, sitting by designation, Judge Jane Restani, chief judge of the U.S. Court of International Trade, upheld an April 2008 decision by Southern District Judge Richard Holwell.

National Restaurant Association, News Release, National Restaurant Association Says Nutrition Information Provision Is Win for Consumers and Restaurants: Will Empower Consumers Across the Country to Make Smart Choices, March 22, 2010, http://www.restaurant.org/pressroom/pressrelease/?id=1910 (accessed August 30, 2010).